Re: THE APPLICATION OF ATLANTIC ) Conservation Order No. 173
RICHFIELD COMPANY for a )
hearing to present testimony ) Kuparuk River Field
to determine the pools rules )
for the development and pro- ) Kuparuk River
duction of the Kuparuk River ) Oil Pool.
Formation west of the Prud- )
hoe Bay Field. The contrac- ) Prudhoe Bay Field
tion of the Prudhoe Bay )
Kuparuk River Oil Pool and ) Prudhoe Bay Kuparuk River
the naming of the filed is ) Oil Pool
considered as part of the )
application. ) May 6, 1981

IT APPEARING THAT:

1. Atlantic Richfield Company by letter dated November 25, 1980, requested the Alaska Oil and Gas Conservation Commission to take the necessary steps to adopt pool rules for the development and production of the Kuparuk River Formation west and north of the Prudhoe Bay Field.

2. Notice of a public hearing was published in the Anchorage Times on February 5, 1981.

3. A public hearing was held on March 25, 1981 at the Municipality of Anchorage Assembly Room, 3500 East Tudor Road, Anchorage, Alaska. Testimony was presented and oral and written statements were accepted.

4. The hearing was continued until April 8, 1981 at 4:30 PM. Additional written statements and maps were recieved.

FINDINGS:

1. Oil was first discovered in the Kuparuk area when Sinclair Oil Company tested oil from the Kuparuk River Formation at their Ugnu No. 1 well in 1969.

2. Since 1969, more than 25 wells have been drilled and hundreds of miles of multi-fold seismic data have been acquired in an attempt to define the limits of the Kuparuk River oil accumulation.

3. The area for the Prudhoe Bay Kuparuk River Oil Pool ules was initially described on January 12, 1970 in Conservation Order No. 83-A and the area has not been changed since that date.

4. A fault, labeled the Eileen fault, exists in the western part of the Prudhoe Bay Field and the evidence indicates that this fault marks the western boundary of the oil accumulation defined as the Prudhoe Bay Kuparuk River Oil Pool.

5. There is doubt about the existence of the Eileen Fault north of the Prudhoe Bay Field and this area may have several faults.

6. Some of the area west and north of the Prudhoe Bay Field should be included within the area where a common accumulation is possible and not covered by the Prudhoe Bay Kuparuk River Oil Pool Rules.

7. The Kuparuk River Formation interval in the Atlantic Richfield Company West Sak River State #1 well appears adequate for defining the pool.

8. The area of oil accumulation appears to be controlled by structural dip and trunction to the south, truncation of the formation to the west , northeast dip and possible faulting to the north and east, and a fault, the Eileen Fault, to the east.

9. The Kuparuk River formation consists of very fine to medium grained marine sandstone, usually occurring as three sand members separated by mudstones, siltstones and thinly bedded sandstones.

10. Sand members of the Kuparuk River Formation west of the Eileen Fault could be a common pool and share the same fluid contact.

11. To date, no wells have established the existance of a gas cap in the Kuparuk River Formation.

12. Although water has been found in the Kuparuk River Formation, no oil-water contacts have been substantiated in any individual sand members.

13. The aquifer underlying the Kuparuk River oil accumulation appears to be small in volume and the influx into the oil column is expected to be insignificant.

14. Preliminary development plans cover an area of 210 square miles.

15. Initial reservoir pressure is estimated to average 3100 psia, with a bubble point pressure of 3000 psia.

16. Solution gas drive is expected to be the primary recovery mechanism.

17. All gas produced will be utilized, in accordance with 20 AAC 25.035 GAS UTILIZATION, for use as fuel, safety flaring, artifical lifting of oil, and injection into the reservoir for storage intil a gas sales pipeline is available.

18. It is proposed that when gas sales facilities become available, the injected gas will be produced from the injected area for fuel and for sale.

19. Waterflooding plans are being formulated for the reservoir.

20. The blowout prevention equipment and its use should be in accordance with 20 AAC 25.035 BLOWOUT PREVENTION EQUIPMENT.

21. The Kuparuk River Field, the name proposed by the operator for the area to be covered by these rules, is considered an appropriate name since it meets the required criteria.

22. Development is planned under state-wide spacing regulations.

23. In the northern latitudes, the convergence of governmental survey lines toward true north results in some governmental quarter sections of less that 150 acres.

24. The drilling, completion and production from a well located in a governmental quarter section of no less than 125 acres will not adversely affect correlative rights.

25. Surface casing setting depths between 500 feet below the base of the permafrost and 2700 feet TVD will allow flexibility in the complex directional well programs.

26. Slotted liners, wire wrapped screen liners with and without gravel packing, and open hole completions may offer a means to reduce formation damage and improve oil recovery.

27. The casing design criteria being used has effectively eliminated casing collapse.

28. Installation of downhole and surface automatic shut-in valves could prevent an uncontrolled flow of oil or gas.

29. A minimum subsurface safety valve setting depth of 500 feet should provide adequate protection from an uncontrolled flow and should reduce the risk of damaging both the valve and the control line while running in the hole.

30. To properly regulate and operate the reservoir, performance must be carefully monitored and bottomhole pressure and gas-oil ration test data must be obtained soon after production commences.

31. The contribution of each of the various perforated intervals in each producing well may be determined by running productivity profile surveys.

NOW THEREFORE, IT IS ORDERED THAT Conservation Order No. 98-A is hereby amended by removing the following described area from the area covered by the Prudhoe Bay Kuparuk River Oil
Pools Rules.

The name of the Pool in the Kuparuk River Field shall be the Kuparuk River Oil Pool and is defined as the accumulation of oil that is common to and correlates with the accumulation found
in the Atlantic Richfield Company West Sak River State No. 1 well between the depths of 6,474 and 6,880 feet.

Rule 3. Well Spacing

Not more than one well may be drilled on any governmental quarter section or governmental lot corresponding to it nor may any well be drilled on a governmental quarter section or governmental lot corresponding to it which contains less than 125 acres, nor may the Pool be opened in a well bore that is closer than 500 feet to any property line nor closer than 1,000
feet to the Pool opened to the well bore in another well.

Rule 4. Casing and Cementing Requirements

(a) Casing and cementing requirements are as specified in 20 AAC 25.030. CASING AND CEMENTING. except as modified below.

(b) For proper anchorage and to prevent an uncontrolled flow, a conductor casing shall be set at least 75 feet below the surface and sufficient cement shall be used to fill the annulus behind the pipe to the surface.

(c) For proper anchorage, to prevent uncontrolled flow, and to protect the well from the effects of permafrost thaw-subsidence and freeze back, a string of surface casing shall
be set at least 500 measured feet below the base of the permafrost section but not below 2700 feet true vertical depth. Sufficient cement shall be used to fill the annulus behind the
casing to the surface.

(d) The surface casing, including connections, shall have minimum post-yield strain properties of 0.9% in tension and 1.26% in compression.

(1) The only types and grades of casing, with threaded connections, that have been shown to meet the requirements in (d) above and have been approved for use as surface casing are the following:

(2) The Commission may approve other types and grades of surface casing upon showing that the proposed casing and connection can meet the post-yield strain requirements in (d) above. This evidence shall consist of one of the following:

(e) Other means for maintaining the integrity of the well from the effects of permafrost thaw-subsidence and freeze back may be approved by the Commission upon application.

(f) The Commission may approve alternate completion methods (to 20 AAC 25.030 (b) (4) and (5)) upon application and presentation of data which shows the alternatives are based on
accepted engineering principles. Such alternative designs may include:

1) slotted liners, wire wrapped screen liners or combinations thereof, landed inside of the open hole and may be gravel packed;

2) open hole completions provided that the casing is set not more than 200 feet above the productive zone.

(a) Upon completion, each well which is capable of unassisted flow of hydrocarbons must be equipped with a commission-approved

(1) fail-safe automatic surface safety valve(SSV) capable of preventing an uncontrolled flow by automatically closing if such a flow should occur; and

(2) fail-safe automatic surface controlled subsurface safety valve (SSSV), unless another type of subsurface valve is approved by the Commission; this valve must be in the tubing string located at a depth of 500 feet or greater below ground level; the valve must be capable of preventing an uncontrolled flow by automatically closing if such a flow should occur.

(b) A representative of the Commission will witness operation and performance tests at intervals and times as prescribed by the Commission to confirm that the SSV, SSSV, and all associated equipment are in proper working condition; and

(c) A well that is not capable of unassisted flow of hydrocarbons as determined by a "no flow" performance test witnessed by a commission representative is not required to have
fail-safe automatic SSV or SSSV valves.

Rule 6. Safety Flares

(a) The daily average volumn of 250 MCF/day is permitted for a safety flare in the Central Production Facility operated by Atlantic Richfield Company.

(b) Safety flare volumes for additional facilities may be approved administratively upon application.

(c) Safety flare volumes may be increased or decreased administratively.

Rule 7. Gas-Oil Ratio Tests

Between 90 and 120 days after continuous production and each six months thereafter a gas-oil ratio test shall be taken on each producing well. The test shall be of at least 12 hours
duration and shall be conducted at the normal producing rate of the well. Test results shall be reported on Gas-Oil Ratio Test, Form 10-409. All tests run in a calendar month shall be reported
by the 15th of the following month.

Rule 8. Pressure Surveys

(a) A static bottomhole pressure survey shall be taken on each well prior to initial sustained production.

(b) Following initial sustained production from each governmental section, a transient pressure survey shall be taken on one well in the section after six months and after 18 months.

(c) One of the wells from (b) above on each lease will be designated a key well and a transient pressure survey on this well shall be taken 30 months production and annually thereafter.

(e) Data from the surveys required in this rule shall filed with the Commission by the last day of the month following the month in which each survey was taken. Reservoir Pressure
Report, Form 10-412 shall be utilized for all surveys with attachments for complete additional data. Data submitted shall include, but are not limited to, rate, pressure, time, depths, temperature, and other well conditions necessary for complete analysis of each survey being conducted. The Pool pressure datum plane shall be 6,200 feet subsea.

(f) Results and data from the special reservoir pressure monitoring techniques, tests, or surveys shall also be submitted as prescribed in (e) of this rule.

(g) By administrative order, the Commission may require additional pressure surveys or modify the key wells designated in (c) of this rule.

Rule 9. Productivity Profiles

(a) During the first year of production, a production survey shall be run in each well which has multiple sand intervals open to the well bore.

(b) Subsequent surveys shall be run in wells which exhibit rapid changes in gas-oil ratio, water-oil ratio, or productivity. Subsequent surveys shall also be required in wells
which have had remedial work performed to change the production profile unless the remedial work results in only one sand interval being open to the well bore.

(c) Complete production survey data and results shall be recorded and filed with the Commission by the 15th day of the month following the month in which each survey is taken.

d) By administrative order, the Commission shall specify additional surveys should it be determined that the surveys submitted under (a) and (b) are inadequate.